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SEC
Proposed Rules on Credit Ratings On May 18, pursuant to Section
932 of the Dodd-Frank
Act, the SEC proposed
rules for credit ratings, NRSROs, and third-party due diligence providers for ABS.
NRSROs would be required to: (i) report on internal controls;
(ii) protect against conflicts of interest; (iii) establish
professional standards for credit analysts; (iv) publicly provide
disclosure concerning specific credit ratings and the methodology used; and
(v) enhance public disclosure on the performance of credit ratings.
The proposed rules would also require a third-party due diligence provider to
provide a public written certification to any NRSRO that rates the ABS.
Comments must be submitted within 60 days after publication in the Federal
Register. SEC
Release. SEC Proposed Rule. CFPB
Mortgage Loan Disclosure Initiative
On May 18, the Consumer Financial Protection Bureau
announced an initiative to combine mortgage
disclosures into a single form. The initiative will involve
the testing of two prototype forms that will inform the CFPB's formal
rulemaking process. Treasury
Release. Mortgage
Disclosure Prototypes. Senate
Hearing on the State of the Securitization Markets
On May 18, the Senate Banking Committee held a hearing
on the state of the securitization
markets. Senate
Hearing. Financial
Services Committee Members Introduce GSE Reform Legislation
On May 13, members of the House Financial
Services Committee introduced seven bills relating
to GSE
Reform. Press
Release. MSRB
Transparency Standard for Municipal Variable Rate Securities
On May 16, the MSRB announced a new transparency standard for municipal variable rate securities.
Under this standard, information will be made publicly available on
EMMA that will allow investors to assess the level of demand, liquidity
provisions, and auction procedures for such securities. MSRB
Release. |
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On May 16, Moody's released its U.S. RMBS surveillance methodology for Scratch and Dent transactions.
Moody's
Methodology. Note: Free registration is
required for Moody's releases and reports. |
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Court
Dismisses Shareholder Derivative Action Against Citigroup Officers and
Directors for Inadequate Pleading of Demand Futility On May 17, 2011, Judge Stein of
the Southern District of New York granted defendants' motion to dismiss with
prejudice this consolidated shareholder derivative action against current and
former Citigroup officers and directors. Plaintiffs alleged that
defendants breached their fiduciary duties of care and loyalty by allowing
Citigroup to invest in mortgage-backed securities; concealing Citigroup's
exposure to those securities; committing securities fraud by making
misleading statements regarding those securities; wasting corporate assets on
the repurchase of Citigroup stock at inflated prices and the retirement
package of the departing CEO; engaging in insider trading; and unjustly
enriching themselves. The court granted defendants' motion to dismiss, noting
that plaintiffs had failed to demand that Citigroup pursue the claims itself
before filing suit and holding that plaintiffs failed to adequately plead
that such a demand would have been futile. Court
Declines to Consider U.S. Senate Report on Financial Crisis in Deciding
Motion to Dismiss
On May 18, 2011, Judge Jones of
the Southern District of New York rejected plaintiff's request that the Court
consider a U.S. Senate report entitled "Wall Street and the Financial
Crisis: Anatomy of a Financial Collapse" in deciding defendants' motion
to dismiss. The plaintiff's complaint alleges that Goldman Sachs
committed fraud in connection with the sale of a collateralized debt
obligation ("CDO") with collateral consisting of subprime
mortgage-backed securities. Plaintiff asserted that the Senate report
contains an extensive discussion of the CDO sale at issue as well as
citations to internal Goldman emails that, according to plaintiff, call into
question defendants' assertions on the motion to dismiss. The Court
held that the Senate report went beyond what the Court could consider on a
motion to dismiss and that plaintiff also failed to provide the Court with
any basis for taking judicial notice of the report. Decision. Senate Report.
Life Settlements Breakfast Briefing
May 26, 2011 – Orrick and Maple Life Financial will be discussing the
recent developments in the life settlement market and how the
changes are affecting business. Please
click here for more information and to RSVP. Orrick's
Annual Financial Services Roundtable
June 14, 2011 – Orrick's Global Employment Law Group and in-house counsel will
host an interactive discussion of critical employment law issues impacting
the financial services industry. Please click here for more
information and to RSVP. |
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